Trump’s Department of Education cuts won’t affect school credit yet, S&P says

(The Center Square) – President Donald Trump’s efforts to dismantle the federal Department of Education won’t lead to widespread financial problems for public schools across the country, according to a leading credit-rating agency.

Trump last Thursday signed an executive order to eliminate the U.S. Department of Education and send education policy back to the state level. Trump’s order gives the department’s responsibilities to other federal agencies and departments.

S&P Global Ratings said it doesn’t expect Trump’s changes to put school finances at risk. The rating agency said widespread credit deterioration or downgrades aren’t on the horizon, but noted “some kindergarten to 12th-grade education providers may experience operating pressure.”

“Public K-12 schools currently receive the majority of their annual revenues from state and local funds, and all 50 states operate their own departments of education and, therefore, determine how school operations are funded,” S&P Global Ratings credit analyst Jane Ridley said. “Should federal funding to K-12 schools decrease, we expect that each state will determine its response to the shifts.”

Legal experts say that Congress must approve closing the department or cutting program funding because it was codified in 1979 in legislation signed by President Jimmy Carter.

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The department ensures compliance with Title IX and federal civil rights laws, collects school data, and oversees the federal student loan and grant programs for higher education, including Pell Grants and $1 trillion in outstanding FAFSA loans. It is also responsible for roughly 10% of the nation’s public education funding, with the majority of money coming from state and local taxes.

Teacher unions and Democratic lawmakers have said they plan to file legal challenges to Trump’s executive order.

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